Grenfell: remedying defects and establishing change

There have been two recent cases which have discussed cladding flammability issues. Stuart Duffy explains the significance of these with reference to details of the Government's apparent plans to address some of the many issues which came to light following the Grenfell tragedy.

It has been more than three years since the fire at Grenfell Tower, which claimed 72 lives and exposed serious failings across the whole system of building and managing high-rise homes.1 As is commonly known, it was the cladding at Grenfell which was vital to the spread of the fire. There have been two recent cases relating to cladding flammability issues which highlight some of the construction issues that surround the Grenfell tragedy. 

Sportcity 4 Management Limited and others v Countryside Properties (UK) Limited [2020] EWHC 1591 (TCC)

In this case, Countryside Properties (UK) Limited (the “Defendant”) made an application for summary judgment and/or striking out the claim brought by Sportcity 4 Management Limited and others (the “Claimants”). The substantive claim related to cladding issues at a development comprising 350 apartments (the “Property”). It was alleged that the remediation work would cost over £15 million, which is a reminder of just how high the costs of “post-Grenfell cladding remediation work” can reach.  

In late 2013, agents managing the Property on behalf of the Claimants asserted that there were problems with the cladding at the Property. The Defendant attended the Property in 2014 to undertake some additional works and attended the Property again in August 2017.  

The Claimants set out three causes of action in their particulars of claim: (1) a claim under the leases relating to the Property, (2) a claim under the Defective Premises Act 1972 (the “DPA”) and (3) a claim that the Defendant breached a duty of care in tort. The Defendant denied that it owed a duty or breached such a duty in respect of the leases and DPA claims. Furthermore, the Defendant accepted that it owed a duty of care in tort, but denied any breach of that duty.  

The main thrust of the Claimants’ case under the leases was that, on a proper construction of the terms, the Defendant was the landlord and, as such, became liable under a number of covenants expressed in the leases. In summary, the Judge did not consider that the Defendant was the landlord and did not consider that it made the covenants in question. This claim was dismissed.  

The claim under the DPA was based on alleged failings in the original construction works. The Defendant alleged that the Claimants were statute-barred from bringing this claim, as the limitation period in respect of the original works had expired. In response, the Claimants alleged that the additional works performed at the Property in 2014 and the attendance in 2017 meant that the cause of action in respect of the original works had recommenced. The Judge disagreed, holding that the cause of action in respect of the additional works and the site attendance were separate from the cause of action in respect of the original works. The Judge held that the Claimants had no prospect of defeating the limitation argument and dismissed this claim. 

With regard to the tort claim advanced by the Claimants, the Defendant alleged that the damages sought were for pure economic loss and were irrecoverable in accordance with the approach in Murphy v Brentwood [1991] 1 AC 398. The Judge held that the authorities compelled him to conclude that the losses were pure economic loss and were irrecoverable. This claim was also dismissed.

The Defendants were entitled to summary judgment in respect of the claims under the leases and the DPA and the tort claim was struck out.   

Comment

Despite the Claimants’ valiant attempts to recover the costs of the cladding remediation work, all three of their claims were dismissed. The key point to draw from this case is that the limitation clock in respect of completed work does not restart following remedial work. Instead, there is a fresh cause of action in respect of the remedial work, which is subject to its own limitation period. 

RG Securities (No.2) Limited v Allianz Global Corporate and Specialty CE and others [2020] EWHC 1646 (TCC) 

This was an application for summary judgment made by the third defendant, R Maskell Limited (“Maskell”), on its defence against RG Securities (No.2) Limited (the “Claimant”). The key issue was whether the claim made against Maskell was statute-barred by virtue of the Limitation Act 1980. The substantive claim related to cladding flammability issues at St Francis Tower in Ipswich – the tallest residential block in Suffolk (the “Tower”). The Tower was substantially refurbished by Maskell prior to 2009 (the “Refurbishment Works”), during which the Tower was over-clad with a Trespa cladding system. The Claimant purchased the freehold in 2015. 

The Claimant’s case was that the Refurbishment Works were not done in a workmanlike or professional manner or with proper materials and, as a result, the Tower was not fit for habitation. The Claimant alleged that the cladding system at the Tower was even more flammable than that used at Grenfell and sought to recover the costs of the remediation works which were estimated to be £3,589,373.70. Maskell pleaded that the Claimant had run out of time to bring its claim. 

The Claimant’s response to the limitation argument was that Maskell had concealed the lack of building regulations approval for the Refurbishment Works and that, as a result, time did not begin to run for limitation purposes until the concealment was discovered. NHBC Building Control Services Ltd was appointed to act as the approved inspector for the Refurbishment Works and the Claimant relied on a number of communications from NHBC to Maskell made between 2009 and 2014 as evidencing that Maskell knew that building regulations approval had not been obtained. This included requests for payment and information from Maskell so that building regulations approval could be obtained. It was alleged that neither were provided. 

In January 2015, solicitors acting for the Claimant submitted a number of pre-purchase enquiries to Maskell. These included a request for evidence which demonstrated that the Tower complied with building regulations. The solicitors acting for Maskell responded, noting that 

“there has never been a problem with the building regulation approval, so we are not doing anything further on that”. The Claimant relied on this communication when making its concealment argument. Maskell denied that any concealment had taken place and alleged that, even if it had, the limitation period in respect of the Claimant’s cause of action had expired before the concealment took place.    

The key legislative provision was section 32 of the Limitation Act 1980, which is titled “Postponement of limitation period in case of fraud, concealment or mistake”. The Judge considered that the effect of section 32 was that, if there had been a deliberate concealment by Maskell of any fact relevant to the Claimant’s cause of action, the limitation period would be postponed. The Judge considered the House of Lords case Sheldon v RHM Outhwaite (Underwriting Agencies) Ltd [1996] A.C. 102 and held that application of the principles in Sheldon meant that time would “reset” from the date on which the deliberate concealment was discovered or when it ought to have been discovered. This meant that, if there was a concealment, the Claimant would not be statute-barred from bringing its claim and this would be the outcome even if the limitation period had expired prior to the concealment. The Judge held that the Claimant’s case on concealment had a realistic prospect of success and was more than merely arguable. Maskell’s application for summary judgment was dismissed.

Comment

The key point to draw from this case is that, where facts relevant to a cause of action have been deliberately concealed, the limitation clock starts to tick when the concealment was discovered or ought to have been discovered.               

The Building Safety Bill 

The Building Safety Bill (the “Bill”) was published on 20 July 2020. The Bill aims to address the many building safety issues identified in the post-Grenfell reviews led by Dame Judith Hackitt. The Bill focuses on “higher-risk buildings”, which is yet to be defined, but is expected to include residential buildings taller than 18 metres.2  Despite the focus on higher-risk buildings, the Bill seeks to address some issues which are relevant to all buildings. The Government has described the proposed changes as “the biggest improvements to building safety in nearly 40 years”.3

Gateways 

The Bill introduces a new “gateway” regime whereby building safety issues are reviewed at three distinct stages of development:

  1. Gateway one will be completed by those applying for planning permission.4  Information submitted at this stage will need to demonstrate that fire safety requirements have been considered and incorporated into proposals. 
  2. Gateway two occurs prior to construction commencing5 and until the requirements of this gateway are fulfilled construction will not begin.6 At this stage, the client will need to provide a signed declaration that they are content with the skills, knowledge, experience and behaviours of the principal designer and principal contractor.7
  3. Gateway three occurs at project completion, where the building control body assesses whether the work has been carried out in accordance with the building regulations.8 At this stage, all prescribed documents and information (the “Golden Thread of Information”) must be handed over to the “Accountable Person”9who has an ongoing duty to assess the building safety risks following completion.

Golden Thread of Information

Building regulations will set out the specific documents, data and information which will make up the Golden Thread of Information. However, it is suggested that the information will relate to a building’s fire and structural safety and will be held digitally. Building regulations will also define the prescribed circumstances where information must be shared and the prescribed persons it must be shared with. 10  

Comment

Those involved in construction are likely to have greater duties to prepare, maintain and disclose building safety information and companies may wish to start considering what systems they will use in order to maintain their Golden Thread of Information. Furthermore, a lack of preparation for gateways could cause projects to fall into delay and could provide further obstacles to practical completion. Whatever conclusions are drawn from the Bill, there seems to be a common message: a greater shift towards transparency in construction and building safety.     

Previous article | Next article

Key contact

Jeremy Glover

Tel: +44 (0)20 7421 1986
LinkedIn
jeremyrglover